What is electronic commerce

E-commerce: definition, legal situation, advantages and disadvantages

What is e-commerce? (Definition)

The term e-commerce, short for Electronic commerce or in German electronic commerce, describes all trade on the Internet, including buying and selling goods on the Internet. E-commerce not only includes online shopping, but also other areas of e-business, such as online banking or customer service. In general, however, the term e-commerce is mainly used for online shopping in common parlance.

Online shop or marketplace model in e-commerce

E-commerce is often equated with the sale of products through one's own online shop. But there is also the so-called marketplace model: If you as a founder do not want to deal with the complex technology of online shops, marketplaces such as eBay or Amazon can be a good alternative. Numerous retailers offer their goods there and the platforms ensure that everything runs smoothly. Commercial dealers can enter their products in the tried and tested system and reach customers worldwide.

If you want to get into e-commerce as a founder, you should therefore consider: Do I create my own online shop or do I sell my goods on a marketplace?

  1. Your own shop: With your own online shop you are a lot more flexible as a founder, but you have to invest a certain amount of time and money in setting up the shop. The advantage: you are and remain your own boss and control the entire process. In addition, there is no third party sales fee.
  2. Marketplace: Together, Amazon and Ebay have a 66 percent market share in e-commerce. None of the competitors can get past 2 percent. When selling on a marketplace like Amazon or Ebay, you can benefit from their huge customer base and generate sales from day 1. However, the marketplace operators earn with every product sold and make important decisions about the conditions under which they can be sold.

Since both models have advantages and disadvantages, it is advisable to work with a combination of your own online shop and sales via marketplaces. You can undoubtedly find faster customers on established marketplaces, but most of the money stays in your pocket in the long term with your own shop. It usually takes years until an online shop is established, while marketplaces can get started right away. Assuming you have a product that is searched for and bought. Products can also be tested very quickly and easily via a marketplace.

E-commerce to support stationary retail

Stationary retail has suffered from e-commerce for many years. At first e-commerce was ridiculed as a short-term trend, then cursed by retailers because of its growing market share. In the meantime, however, there has been a rethink in stationary retail: under the technical term "multichannel", classic retailers are no longer just stationary, but also in e-commerce.

The dealers use different forms of the Multichannel sales back. Some are two-pronged and offer their goods separately in terms of price and logistics - i.e. online and offline. In the meantime, however, it has turned out that a close connection between e-commerce and stationary trade is most economically effective. In this way, the advantages of traditional retail can be used, for example online orders can be picked up in the shop free of charge. Customers can also be lured into the store, for example, by special offers that they receive online.

Shop systems for successful e-commerce

If you want to open an online shop, the first step is to choose a shop system. You can choose between a shop construction kit, a plug-in for Wordpress or self-hosted shop software. Since this decision has to be made over the long term, you should take your time and inform yourself well.

1. Shop kit

If you only have a few products and the online shop is only an additional option for your customers, then a shop construction kit may be recommended. Such systems do not require any programming knowledge, are quick to set up and cost little. However, they lack flexibility and functionality. And above all: the shop does not belong to you, but to the provider. If he changes his business policy or closes his offer, your shop is at risk.

Should you still decide to do so, you can find out more about the details from providers such as Shopify, Plentymarkets, Strato, 1 & 1 or Jimdo.

2. Wordpress E-Commerce Plugin

If you already have a Wordpress blog, you don't have to start a completely new project, you can "upgrade" the blog - with the help of Shopware or open source solutions for Wordpress, a shop can be easily integrated. A good compromise solution, because then the shop is at least integrated on the own website.

3. Shop software

If you want to sell a lot of products and generate larger sales online, then you cannot avoid professional shop software. A good shop software can be completely adapted in terms of design, individual functions can be added and all important payment methods can be embedded. If you are technically very fit, you can run such software yourself at low cost. If the necessary know-how in the field of web development is missing, then external agencies are available to take over the complete technical processing.

The following software solutions are among the best known in e-commerce:

  • Magento
  • xt: Commerce
  • Gambio
  • Shopware
  • Oxid eShop

In a separate section, we will show you further details on the appropriate shop software.

Online payment systems in e-commerce

According to various studies, the selection of the right payment method is probably the decisive success factor in e-commerce: If the payment method preferred by the user is not offered, the purchase is often canceled. But which are the online payment systems with the greatest popularity in e-commerce in Germany?

  • The use of mobile payment methods via smartphone increased from 6% to 12% in 2020.
  • Germans prefer to use PayPal (51%) to pay for their online purchases, followed by the payment systems from Google and Apple.

Other payment systems such as prepayment, instant transfer or giropay play a subordinate role in e-commerce. The use of all these payment methods in your shop is made possible by so-called payment service providers, which act as an interface between the individual payment methods and online retailers in e-commerce.

These payment service providers have different cost models, but in principle the following applies: For each sales transaction, a small percentage must be given to the payment service provider. Some of the providers add monthly fixed costs. Choosing the right payment service provider is an important step when founding an e-commerce company and should therefore be done carefully: Payment systems at a glance.

Marketing in e-commerce

Given the huge competition, an online shop alone is no longer enough to generate large sales in e-commerce. Without targeted marketing measures, only a few users will find you. The solution: online marketing.

The important online marketing measures are:

Of these marketing measures, SEO and social media marketing are particularly suitable for tight budgets; These measures should help founders in particular when promoting their own online shop.

Web analysis: measuring success in e-commerce

As soon as you have started your first online marketing campaigns, you can measure the success of the campaigns in real time using your analytics software. This is the great advantage of e-commerce: advertisements in newspapers, flyers or even commercials on TV can only be checked to a limited extent for their advertising success.

In online marketing, every visitor, even every click of a user, can be measured and analyzed. In this way, a statement about the advertising efficiency can be made about each individual advertising campaign and the campaign can be adjusted or deactivated as required.

There are many dangers lurking for your online shop on the web. With an online shop insurance you can z. B. protect against hacker attacks and cyber theft.

Online shop insurance

Legal Regulations for E-Commerce

Online shop operators have to comply with a number of legal frameworks when creating and running their shop. This serves in particular to maintain the data security of the customers.

  • Provider identification: Every online shop needs a legally correct imprint that contains all mandatory information (different depending on the legal form).
  • Terms and Conditions (GTC): Although not anchored in law, it makes sense for online shop operators to create terms and conditions for their own shop. Regulations on payment, conclusion of contracts, etc. are set out here. set. The seller must ensure that the customer has read the terms and conditions before completing the purchase.
  • Right of withdrawal and cancellation policy: The consumer has a withdrawal period of 14 days (§ 355 BGB). This means that he can cancel the purchase within this period. Sellers must place the cancellation policy on their website and actively confirm that the customer has read them before concluding the purchase.
  • Data protection and data protection declaration: Every online shop needs a complete data protection declaration. The operator must also ensure that the relevant data protection measures are implemented accordingly.
  • Button solution: The wording for the “Order” button must comply with the legal requirements (“Order now for a fee”, “Buy”, etc.)
  • Prices and shipping costs: The price information must always be given correctly and completely. This means that sales tax and shipping costs are mandatory.
  • Delivery times: The goods on offer must be available immediately and deliverable within a few days. If goods cannot be delivered within five days, the seller must point out the longer delivery time.
  • Sold out products: Offering sold out items without notice is not permitted; such offers are considered to be legally misleading and are referred to as "decoy offers". This constitutes a violation of competition law.
  • Packaging Act: Anyone who sends goods has to pack the goods. That can fall under the Packaging Act. Read the rules, risks to the packaging act and where to register packaging.
  • Delivery thresholds: Do you deliver goods to other EU countries? Then you have to observe the delivery thresholds per country for the correct declaration of sales tax.
  • Newsletter: Registrations for the newsletter require a double opt-in and the newsletter itself must contain elements such as the imprint and a single opt-out button.

Advantages of online trading for companies and customers

E-commerce, and in particular online shopping, of course, offer both companies and customers numerous advantages, but also have some disadvantages.

  • Speed: purchase processes can be carried out and processed without delay; the product arrives very quickly
  • Customers can order around the clock and are not bound by retail opening times
  • Convenience: Customers can leaf through online catalogs from home, browse shops, choose the product they want and pay for it
  • Overcoming spatial distances
  • Many e-shops offer a 24-hour service; generally quick response time for problems and inquiries
  • Better comparison of price and product
  • Customer needs are optimally met; high customer satisfaction
  • High efficiency: online shopping not only accelerates the sales processes, but also minimizes personnel costs
  • Low transaction costs: checkout, inventory and shop systems automatically monitor inventory and cash flow; the establishment of branches may become superfluous
  • Complex implementation
  • Advertising effort and costs
  • Payment and data security are complex to implement
  • High competition and price pressure
  • No personal customer contact, lack of personal advice
  • Shop dying

Conclusion: is e-commerce suitable for your idea?

Whether as a supplement to brick-and-mortar retail or as a separate mainstay: e-commerce offers founders many opportunities. Although online trading also has some disadvantages, the advantages that you can gain from opening an online shop outweigh the disadvantages. We have put together for you how you can set up an online shop step by step and start e-commerce in our guide on the subject:

Open an online shop

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.